Financial economist Allison Schrager says you can't have nice things anymore — or at least, you can't have all of them, not in this interest rate environment. After 40 years of falling interest rates, they're sharply rising again, and those higher rates force more discipline on everyone: not just consumers, but businesses and governments, all of which need to confront the higher cost of capital and decide what's really worth spending on. This is the intended effect of the Federal Reserve’s rate-hiking campaign: Excess consumer demand is fueling inflation, and getting people to cool it a little will hopefully take some of the upward pressure off prices. In some ways, this discipline can be good, if it forces businesses and governments to figure out how they're inefficient and what they can do to spend more wisely. And it's taking the wind out of some of the most annoying investing bubbles of the last decade, including crypto. But it also means pain for consumers, and if the Fed doesn't get things exactly right, it could drive us into recession. In this episode, Allison discusses whether you should hold your breath for the return of sub-3-percent mortgages (no) and the pitfalls and surprising benefits of our new world of higher rates.

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